Renewing a mortgage is an essential part of homeownership. The process is seen by some as a routine one, like going to the dentist, but for others, it may be a matter of urgency — but is this the best approach?

By renewing early or auto-renewing, you are tied to your same lender, which can result in an unattractive rate and the loss of savings. There remains the question of whether early renewals save or cost homeowners money in a relatively small window.

Check out what it costs and what benefits come with early mortgage renewals.

The process of renewing a mortgage


When your mortgage term ends, you’re eligible for a renewal if you haven’t reached the end of your amortization period or have paid off your loan early. An average mortgage term lasts five years, but it can last as long as 10 years.

Your loan term represents how long you have had your loan agreement with your lender. As part of the contract, the lender outlines your interest rate, type of mortgage rate, options to renew your mortgage, and any fees associated with the agreement in certain cases, such as prepayment penalties.

The process of renewing your mortgage with the same lender is relatively straightforward if you have made your payments on time. You only need to sign and return renewal papers.

Of course, you can – and perhaps should – compare different lenders to find out if there is a better interest rate or if there are other favorable terms, such as reduced prepayment fees.

Benefits of An Early Renewal.

The earlier you lock in a low-interest rate, the less likely you are to have a higher rate at the end of your mortgage term when the term ends.

However, a higher rate will not always mean a lower rate later. In cases where the renewal rate is less than your current or anticipated rate, you may be able to save money by renewing early.

Short Term Vs. Long Term Mortgages.

Some people take out an extremely long-term mortgage when rates are low in order to save money. People who take out short-term mortgages when interest rates are high hope that rates will have dropped by the time they need to renew them.

However, this is not always the best option. A mortgage professional can provide you with more information about the best term for you.

Analyzing your mortgage options.


You are not required to sign renewal papers if you receive them from your mortgage holder. The renewal papers are usually sent about 4 months prior to their expiration date.

This is the perfect time to evaluate your financial situation and determine if switching mortgage holders would be beneficial to you. Is your income higher than when you last renewed your mortgage?

It might be a good idea to choose a loan with a higher payment so you can pay it off sooner. Has the interest rate gone down? It might be a good idea to shop around.

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Arnab is a professional blogger, having an enormous interest in writing blogs and other jones of calligraphies. In terms of his professional commitments, He carries out sharing sentient blogs by maintaining top-to-toe SEO aspects. Follow more of his contributions at Finance Team

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